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Agreement is an apparent turnabout for GESometimes, the actions of the big and powerful are beyond the comprehension of mere mortals. One of those cases may have occurred last month, when GE Medical Systems agreed to swap stock for tilting C-arm
Agreement is an apparent turnabout for GE
Sometimes, the actions of the big and powerful are beyond the comprehension of mere mortals. One of those cases may have occurred last month, when GE Medical Systems agreed to swap stock for tilting C-arm technology developed by Fischer Imaging of Denver. The deal came after years of an on-again, off-again marketing relationship between the two firms that had an unsettling impact on Fischers financial results.
Fischer announced March 29 that GE would exchange 62% of its preferred stock in Fischer for the nonexclusive right to manufacture the companys Tilt-C tilting C-arm system. The companies expect that the transfer of necessary technology will be completed by mid-April, although Fischer will continue to manufacture the units for GE through the end of 1999. The transaction will give Fischer a one-time gain of roughly $6 million.
The relationship between Fischer and GE regarding Tilt-C has been rocky since its inception. In 1994, the two firms agreed that Fischer would supply GE with Tilt-C and other products. A year later, as Fischer struggled with declining revenues, Milwaukee-based GE offered Fischer $10 million in an effort to bolster the troubled firm and ensure GEs access to Tilt-C (SCAN 7/6/95). GEs investment included the option of taking over manufacturing of Tilt-C in exchange for Fischer preferred stock, in the event of a hostile takeover at Fischer.
But despite its ostensible commitment to Tilt-C, the number of orders GE placed for the units dropped over the next two years. This contributed to a 50% decline in Fischers OEM sales that wreaked havoc on the companys financial results (SCAN 8/6/97). GEs decision to manufacture the systems is an apparent turnaround in its position on the product, but GE executives were unavailable for comment.
From Fischers standpoint, last months deal is part of its effort to refocus the companys energies toward whole systems rather than components, according to Morgan Nields, chairman and CEO.
Our focus is to deemphasize manufacturing components in subsystems for other OEMs, Nields said. Our interest is no longer in that line of business. Were interested in manufacturing the entire system, as well as installing and servicing it. Our goal is to move our activities down the value chain, closer to the customer.
Since the agreement isnt exclusive, Fischer will continue to manufacture its version of Tilt-C, and retains the right to license the technology to other entities.
© 1999 Miller Freeman, Inc.All rights reserved.